Getting a Low Interest Rate

Locking It In

A rate "lock" or "commitment" is a promise from the lender to lock in a particular interest rate and a particular number of points for you for a specified period of time during your application process. This prevents you from working through your whole application process and finding out at the end that your interest rate has gone up.

Rate lock periods can vary in length, anywhere from 15 to 60 days, with the longer ones usually costing more. The lending institution will agree to lock in an interest rate and points for a longer span of time, like sixty days, but in exchange, the rate (and sometimes points) will be more than that of a rate lock of a shorter period.

Other Interest Saving Strategies

In addition to going with the shorter lock period, there are more ways you can get the best rate. The larger down payment you can make, the smaller your rate will be, since you will have more equity from the beginning. You can pay points to bring down your interest rate over the life of the loan, meaning you pay more initially. One strategy that is a good option for some is to pay points to reduce the rate over the life of the loan. You will pay more initially, but you will come out ahead, especially if you keep the loan for a long time.

Metro Mortgage can answer questions about rate lock periods and many others. Give us a call at 866-300-1550.

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